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SUMMARY & TABLE OF CONTENTS

Authors

HelenGoodland,ChrisLindbergandPaulShorthouse

December4,2015

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A vision of the future Inaworldpoweredbyinnovation,actionisneededtoensurethatBCconstructioncompaniesarereadytomeetthechallengesahead.

It’shardtooverstatetheimportanceofconstructiontoBC’seconomy.Asa$16.5billiondollarindustryitprovides8%oftheprovince’sGDPandemploysmorethan200,000workers,makingconstructiononeofBC’slargestemployers.Thismeansinnovationisvitalforthecontinuedprosperityoftheprovince.

Theindustry’sfutureincludesprofoundregulatory,technical,demographic,macroeconomicandconsumerchangesthatwillimpacteveryaspectofconstruction.Nationalandinternationalfactorssuchasanagingpopulation,climatechangeandthedigitaldesignrevolutionarechangingtheneedsandexpectationsofregulators,clientsandend-usersandalsoputtingpressureontheindustrytointegratenewideas,technologiesandspecificationsintotheirprojects.

BCconstructionfirmswillhavetoadaptandinnovateorriskbeingleftbehind.AlthoughBCisstrongingreenbuildingandwoodtechnologies,wehavecatchinguptodoinotherareas.PublicandcorporateinvestmentininnovationinBClagsbehindotherhighlydevelopedcountries.Themechanismsforknowledgesharingandcollaborationoutsideofprojectsdonotexist.Fundamentally,theindustryhasnotfosteredacultureofinnovationthattranscendsday-to-dayproblemsolvingonaconstructionsite.

Thesegapsareconcerningbecauseinnovationistheultimatesourceoflong-termeconomicgrowthandcompetitiveness.Theabilitytocreatenewproducts,techniquesandservices,tofindnovelusesforexistingproductsandtodevelopnewmarketsprovideswillensuresuccessinthetwenty-firstcentury.

This“calltoaction”ismeantforgeneralcontractingandtradecompaniesandthemanystakeholdersthatareinvolvedwithconstructioninBC.Ourreportmakesthecasethatengagingpro-activelywithinnovationcanhaveapositiveimpactonbusinessandtheabilityofbusinessesofallsizestosucceed.Itoutlinesthekeychallengesthathavetobeovercomeandhighlightstheneedfora“made-in-BC”constructioninnovationactionplanthatcanserveasamodelfortherestofthecountry.

TheBCConstructionAssociationispleasedtoleadthechargeonthisimportantissue,andproudtohaveco-fundedthisreport.Welookforwardtocontinuingtheconversationandwelcomeallstakeholderstojoinus.

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The state of innovation in BC’s construction industry

Innovationcanbedefinedasthesuccessfulintroductionofnewtechnologiesorproceduresintoindustry.Thescopeofinnovationintheconstructionindustryisbroadandappliestoeverythingfrombuildingproducts,materialsandsystemstoconstructiontechniques,equipmentandbusinessoperations.

Theneedformoreinnovationandbetterinnovationdeploymentsystemsintheconstructionsectoriswellrecognized.Comparedtootherindustries,constructioninmostregions(includingBC)remainslargelylocally-focused,undiversified,andwithrelativelysmallexportmarkets.Despitethefactthatitisamajormarketforthetechsector,thereisnoconstruction-specificinnovationplatformonwhichtoengagewiththeR&Dandstart-upcommunity.

Externalforcessuchaschangingsocietaldemandsandexpectations,theincreasinglyglobalizedmarketandbusinessclimate,labourmarketchallengesandadvancesinknowledgeandtechnologyarecreatingnewpressuresforconstructioncompaniestoinnovate.Althoughitmayaffectindividualbusinessesverydifferently,thereisgeneralagreementthatthewayconstructiongetsdonetenyearsfromnowwillbeverydifferentfromtoday.Innovationwillbeessentialtotheindustryasawholetoreducecapitalconstructioncosts,improveproductivity,increasethenumberofprojectscompletedontimeandwithinbudget,andreducethenumberofdefectsandaccidents.Investmentininnovationcanalsohelpcompaniestodifferentiate,improvetheirreputationandcompeteforthenextgenerationoftalentinatightlabourmarket.

Itisimperativefortheindustrytocontinuetoinnovateinresponsetothesedriversorriskbeingleftbehind.Constructionindustrymemberssaythatcostofmaterialsandenergy,anagingworkforce,theneedforworkerswithhigherqualificationsandsustainabilityarethefourmostimportantdriversofinnovationinBC.Theyaremanifestingthemselvesintrendssuchaslowcarbondesign,thedigitalrevolutionandtheinfluxofcheapproducts(andlabour)fromoverseas.

Thereareseveralareasofstrengththattheconstructionindustrycanleverageasastartingpointtobuildacultureofinnovation.BC’seconomyhasstrongprospectsforgrowthwithlowinterestratesandanattractivecorporatetaxregime.Theindustryhasexpertiseinwooddesign,constructionandtheinfrastructurethatsupportsthedevelopmentofinnovativewoodproducts,capabilitiesindigitaltechnologiesandbuildingenvelopedesign,testingandassembly.BCbuilderscanalsoputupaconcretehighrisebuildingfasterthanmost.ThenextgenerationoftalentisputtingafreshfacetotheindustryandanewfederalgovernmentbringsconcretecommitmentstoinvestinginCanada.TheBCconstructionindustry’sleadershipingreenbuildingandinallsortsofinnovativeapplicationsofwoodtechnologiesiscomingtotheforejustatthemomentwhentheworldislookingtothebuiltenvironmenttomitigateenvironmentalandsocialchallenges.

However,theindustryalsofaceschallenges—suchasthenumberofstakeholders,riskaversion,thelackofacultureoflearningandshorttermthinking—thataredeeplyrootedandwillbeverydifficulttodislodge.Thethreatsofcontinuedlowproductivity,lackofattractivenessasacareerpathtonewworkers,andanunsatisfactoryreputation(whetherjustifiedornot)willonlybecomegreaterastheregulatoryframeworkcontinuestobecomemorechallenging,materialscostsgoupandthelabourshortagebecomesincreasinglyacute.

BCiswellpositionedtotacklethechallengesthatlieahead,butitwilltakeaconcertedeffort.Creatingacultureofinnovationwillnotjusthappenbyitself–itrequiresthecommitment,investmentanddeterminationoftheindustryasawhole.

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A vision for BC’s construction industry ThisdocumentshowsthatembracinginnovationwillimproveprojectandbusinessperformanceandpositionBCconstructioncompaniesforsuccess.However,acomprehensiveindustrialactionplanisneededtocoordinateeffortsandcatalyzeandcaptureindustryinnovation.Wepresentthecaseforsuchaplanandoffersfivefoundationalpillarstoserveasaguidingframework:

1. Leadership–Acohesiveindustrythatembracesandcelebratesinnovation2. Performance—Aresponsibleindustrythatcontinuallyimprovesprojects’economic,environmental

andsocialperformance3. People–Atalentedindustrythatattractsaskilled,technologically-savvyworkforce4. Growthandresilience–Anefficient,competitiveandprofitableindustrythatdriveseconomic

growth5. R&D–Anadvancedindustrythatdevelopsandimplementsinnovativenewproducts,processesand

businessstrategies.

ThesefivepillarslayoutanaspirationalinnovationprogramofambitionsandrecommendedactivitiesfortheprovincethatreflectbestpracticesandthestrengthsandweaknessesoftheBCconstructionindustry.Theirsuccessfulimplementationwillrequirebroadsupportfromgovernment,researchorganizationsandtheconstructionindustryasawhole.

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Pillar 1: Leadership - A cohesive industry that embraces and celebrates innovation

Ambition1.1Establishanaction-orientedinnovationcounciltobethe"voice"ofinnovationin

constructioninBC

a. Establishanaction-orientedinnovationcounciltobethe“voice”oninnovationinconstructioninBCb. Developaformalindustrialactionplanforinnovationc. Keeptheconversationalivewithaseriesof“meetingoftheminds”dialoguesaroundtheprovinced. Developstrategiessothatthemanyvoicesofsmallbusinessesareheard

Ambition1.2.Reportonkeyperformanceindicatorsforconstructionexcellence

a. Engagewithindustryleadersandstakeholderstodeterminetheoptimalsuiteofindicators,reportingframework,andresponsibilitiesfordatacollectionandmonitoring.

Ambition1.3Recognizeandcelebrateinnovation“champions”

a. Promoteawardsandrecognitionprogramsforinnovationb. Showcaseleadingindividualsandorganizations

Ambition1.4Shiftmisperceptionsoftheindustryviapublicengagementandstakeholder

communication

a. Developandmaintainpublicengagementandstakeholdercommunicationprogramsb. Reviewandrevamplanguageandimagestosteerawayfromtraditionalperceptionsofconstructionbeing

physicallydemandingandwithoutopportunitiesforcareeradvancement.

Ambition1.5Pro-activelyengagewithgovernmentonprogramandpolicydevelopment,investment

andprocurement

a. Pro-activelyengagewithalltherelevantdepartmentsandagenciesofgovernmentatthelocalandprovinciallevel:fosteringpartnershipswherepossiblesoindustrystaysaheadofcodeschanges,etc.

b. Considertheprosandconsofadvocatingforasinglepointofseniorleadershipwithingovernmenttohelpdirectdesiredreforms

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Pillar 2: Performance - A responsible industry that continually improves projects’ economic, environmental and social performance

Ambition2.1Encouragetheadoptionofinnovativedesignandconstructionmethodsthatputquality

first

a. Advocateforopenuniversalstandardstomakecommunicationanddatatransferseamlessandsecureacrossallplatformsanddevices

b. Supporttheadoptionof“ModernMethodsofConstruction”suchasoff-siteconstructionandleanconstruction

c. Helpbusinessesofallsizesgainaccesstoanddeploythenewtoolsandtechnologiestheyneedtobecompetitive

Ambition2.2Continuetopushtheboundariesinlow-carbon,healthyandgreenconstruction

a. LeverageBCleadershipingreenbuildingandtheuseofwoodwhenfocussingonourcompetitiveadvantagesb. Promoteoccupantandoperatortrainingtoensurebuildingsworkproperlyandprotectinvestmentsin

innovationc. Supporttheadoptionofsustainablematerialsandtechnologies

Ambition2.3Encourageallbusinessestodemonstratecorporateresponsibility

a. Encouragecompaniesofallsizestoactethicallyandtransparentlyatalltimestobuildapositivereputationandwinwork

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Pillar 3: People - A talented industry that attracts a skilled, technologically-savvy workforce

Ambition3.1Helpbusinessesofallsizestoacquirethefullspectrumofskillsnecessarytocreateand

implementinnovativeideassuccessfully

a. Fosteracultureoflearningtodevelopanengagedandinformedworkforceb. Developbusinessleadershipcapacitysocompaniesofallsizescanmanageforinnovationc. Considerestablishing“BestPracticeClubs”tobringthebenefitsofbestpracticetoapractical,personaland

locallevel

Ambition3.2Helpbusinessesleverageinnovationtodriverecruitmentandretention

a. Undertakeareviewofprogramsaimedatimprovingtheimageandperceptionoftheindustrybyencouraging“beyondcode”bestpractice

b. Reviewrecruitmentmessagingsothatitexplainsthecareerdevelopmentopportunitiesandthediversityofjobsavailable

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Pillar 4: Growth and resilience – An efficient, competitive and profitable industry that drives economic growth

Ambition4.1Ensureprocurementstructuresmeetclientandindustryneedsandprovideanequitable

frameworkwithinwhichcompaniescaninnovatesafely

a. Reviewcurrentprocurementpracticesandimplementtheimprovementsidentifiedb. Advocatefora“quality-first”agendawherelifecyclecostsandthevalueofdesignarerecognizedc. Developcommonlanguageforhow“innovation”shouldbedescribedandinterpretedinthebidprocessd. Createandofferprocurementtrainingforownerse. Workwithstakeholderstodeterminehowtomitigateadversarialbehaviours(suchassuicidebidding)andto

minimizetheundergroundeconomy

Ambition4.2Supportongoingevolutionofstandardsandcodesasameanstopushtheinnovation

intothemarket

a. Fosteracloseworkingrelationshipwithpolicymakersatthemunicipalandprovinciallevelsandparticipateproactivelyinthedevelopmentofcodesandstandards

b. Advocateforperformance-basedbuildingcodesasawaytodriveinnovationintobuildingprojects

Ambition4.3Developstrongsupplychainssonewideascanberealizedcosteffectivelyandina

timelymanner

a. Encouragemethodsthatclosegapsinthesupplychaintoensurethereliablereleaseofworkbetweenspecialistsindesign,supplyandassembly

b. Advocateforcentralized,onlinebiddingandtenderingc. Promoteadesign-led,“life-cyclecost”approachsothatconsultantsarerewardedfortheirexpertised. Connectwithfinancialinstitutionsandinsurerstoexploreinnovativefinancingandriskmanagement

mechanisms

Ambition4.4PrioritizeinnovationsthathelpBCcompaniestoboostcompetitivenesssotheycan

realiseareturnoninvestmentininnovation

a. ShowcaseBCcompanies’proficiencyinsustainableconstructionprocessesandproductsb. LeverageBC’svariousexportagenciestopromoteBCcompanies’expertisetonewmarkets

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Pillar 5: Research and development - An advanced industry that develops and implements innovative new products, processes and business strategies

Ambition5.1.Supportresearchanddevelopmentnetworksandcentres

a. Exploretheviabilityofestablishingaconstruction-focussedtechnologycluster,leveragingtheleadershipofBC’swoodsectorasarolemodelandpossiblepartner

b. LeverageVancouver’sestablishedventurecapitalcapacityandstart-upcommunitytosupportaconstruction-focussedincubator

c. CreateopportunitiesforindustrytofeedbackideasfromthefieldintotheR&Dcommunity

Ambition5.2Showcasedemonstrationprojects

a. BuildonBC’strackrecordof“beingfirst”whenitcomestoinnovativeprojectsb. Connectwithindustryassociations,tradeagenciesandNGOswhocanhelptoprofilelocalsuccessstories,

collectdataandbuildalibraryofprojects

Ambition5.3Advocatefor,enableanddirectpublicfundingandbusinessinvestmentininnovation

a. Onthestrengthofasharplydefinedvisionfortheindustry,advocatestronglyformorepublicspendingonconstruction-relatedR&D

b. Helpindustryadvocates(suchasassociations)makethebusinesscaseforinvestmentinR&Dtoconstructioncompanies

Ambition5.4StrengthentheroleoflargefirmsinBCasdriversofinnovation

a. Developtoolsandresourcesforlargefirmstousetoengageemployeesandhelpthem“thinklikeinnovators”b. HelplargeGCfirmstopromotetheirinvestmentsininnovationsotheycanworktogethereffectivelyandwin

workc. Encouragelargefirmstoshareideasandsupportcollaborationtoincreasetherateofmarkettransformation

Ambition5.5Encouragebusinessestocollaboratetoachievescaleandshareknowledge

a. Fosterasafeandpositiveenvironmentinwhichcompaniescancollaboratetodevelopnew(nonproject-specific)solutions

b. Providetoolsandresourcesforcompaniestocollaborateinordertoachievesufficientscaletocompeteonlargeprojects

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Three top priority actions 1. Create an action-oriented Innovation Council A“ConstructionInnovationCouncil”withanoutcome-orientedmandateisessentialtocreateacohesiveandresonantvoiceanddrivetheagendaforward.ParticipationontheCouncilneedstobecarefullysoughtfromrepresentativeswithinkeystakeholdergroups(clients,researchers,trainers,consultants,etc.)whoaremotivatedtoactandhaveaproventrackrecordofaccomplishments.TheCouncilwouldberesponsibleforsteeringthedevelopmentofaformalindustrialactionplanforinnovation,fundraisingforoperationsandactivities,advocacyand,importantly,governmentrelations.ItwouldalsoofferareplicablemodelforotherCouncilsacrossthecountryandconnectintosimilarorganizationsaroundtheworld.

2. Develop an action plan for construction innovation Toorganizeandprioritizealltheworkthatneedstogetdone,companiesofallsizeswouldbenefitfromaninnovationactionplanbuiltoncleargoalsanddescribingtheprioritizedfocusareasforresearch,timelinesandhowprojectsandactivitiesaredecidedupon.Werecommendthefollowingnextstepstostarttheprocess:

• Decideontheroleofgovernmentintheactionplan..Therationaleforinvolvinggovernmentisthatmanyoftheenablersneededtoadvanceinnovationdependongovernmentsupportandinvestment.Thepotentialrisktothisapproachisthatitwouldreducetheindustry’sinfluenceonthetimelinesandfinalproduct.

• Translateambitionsintoactivities.Thisstudyprovidestheframeworkforaninnovationactionplan,whichnowneedstobevalidatedandrefinedinconsultationwithindustryandstakeholders.Onthestrengthoffeedbackfromindustry,theambitionsneedtobedistilledintoconcretegoalsandtimelinesforimplementationsothatprojectsandactivitiescanbedeveloped.

• Measuringsuccess:Industryneedstodetermineifitispreparedtoestablishtargetsandperformancemeasurestomakesurethatinvestmentsininnovationareactuallyimprovingproductivityandperformanceanddeliveringbusinesstoconstructioncompanies.

3. Launch an innovation procurement initiative Asitstands,theprocurementprocessneedstobefixed.Therehastobeashiftfromacultureof“lowestbid”tofocusincreasinglyonqualityand“whole-life”value.Thefirststepisaprocurementprocessreviewtoidentifyoptionsforimprovingexistingapproachestoprocurement(particularlybypublicsectorbuildingowners),potentiallybasedoneffectiveprocurementmodelsfromotherjurisdictions

Althoughaprocurementreviewwilluncoverarangeofactionsthatneedtobetaken(notleastofwhichwillundoubtedlybetrainingforownersandpurchasers),somethingindustryleaderscoulddeveloprightawayisa“bestpractices”documentforpublicprocurementagencieswithclearguidelines,thatincludeadefinitionofinnovationandhowitshouldbedescribedandinterpretedinthebiddingprocess.

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There is more that can be done Therearemanyactivitiesthatneedtobetakenontobuildavibrantinnovationecosystem.Thepossibilitiesareextensiveandexciting.However,theyallstartwiththewillingnesstochangeandtheacceptancethatitisinthebestinterestofthebroaderindustryforbusinessofallsizestogetonboard.Toeffectmeaningfulchangewillrequirealong-termcommitmentandinvestment;resultsarenotgoingtohappenovernight.

Acomplete,prioritized,industry-supportedlistofprojectsandprogramswillcomefromdevelopingaformalindustrialactionplanthatincludesconcretegoals.Thefollowing“shoppinglist”ofsevenitemsillustrateswhatweheardfromsurveyrespondents,intervieweesandfocusgroupsandprovidesideasofwheretofocusinitialefforts.

1. Developandhost“meetingoftheminds”dialogues2. ConductmoreresearchintoKPIsandmetrics3. Explorestrategiestoimproveandcommunicateworkforcecapabilities,opportunitiesand

accomplishments4. LeverageRegionalConstructionAssociations’networksandcapabilitiestosetup“bestpracticeclubs”5. Developanintegratedprovince-wideinnovationnetworkandcentre6. InventoryestablishedR&Dassets(e.g.academicinstitutions,labs,trainingcentres,demonstration/

monitoringfacilities,prototypingandtestingcentres,andmanufacturingcompanies)7. DevelopaneducationandtrainingstrategyorientedaroundinnovationtoengageSMEs

BCiswell-positionedtotacklethechallengesthatlieahead;butaconcreteactionplanisneededtocoordinateeffortsandcatalyzeinnovationinawaythatismeaningfulforallconstructionbusinesses.Todevelopandimplementthisplanrequiresanindustry-widecommitmentandinvestment,butwillyieldsignificantbenefitsforBC’sconstructioncompaniesandtheprovinceasawhole.

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About the report TheConstructionInnovationProjectistheculminationofeightmonthsofresearchunderpinnedbyaprovince-wideconsultationprocesswithcontractors,consultants,ownersandstakeholdersinvolvedinalltypesofproject(fromhomerenovationstoaluminumsmeltingfacilities).Itlaysthegroundworkforacoherent,constructiveandsustainedconversationaboutinnovationthatincludesallstakeholders.Itattemptstoweavetogetherthecommonthreadsemergingindiscussionswithinandbetweendesignandconstructionbusinesses(largeandsmall),owners,researchers,investorsandpolicymakers.Ultimately,itcapturesthevisiontowardswhichtheBCconstructionindustryisstrivingtoachievesustainablebestpractice.

OurobjectiveistosummarizethecurrentconstructioninnovationlandscapeinBCandofferadefinitionofinnovationasitrelatestoconstructionsoBCCA,theRegionalConstructionAssociations(RCAs)andotherscanfocustheiradvocacyeffortsformaximumimpactandofferbestvaluetotheirmembersinthesechangingtimes.Indeed,theproject’scontinuedsuccessdependsnotonlyonbuy-infrombusinessesthroughoutBC,butalsoonstrongpoliticalandfinancialsupportfromthegovernmentanditsagencies.ItisthereforeaCalltoActionforbusinesses,investorsandstakeholderstoseizeonthegroundswellofinterestintheindustryandjointheeffortsunderwayinotherjurisdictionsandworktogethertobestexploittheforcesofchange.ItalsooffersindustryleadersandstakeholdersawaytoprioritizeeffortsandIdentifyhoweducationandappliedresearchcanbeappliedtoachieveavisionfortheindustry.

Wewanttokeeptheconversationalive:Forsome,thefindingsofthisstudywillraisemorequestionsthanitprovidesanswers.Ifitstimulatesfurtherconstructivedebatethenithasbeenasuccess.Asmuchasitisacatalystforthosewhoworkintheconstructionindustrytothinkaboutwhatthefuturemightlooklike,theambitionsproposedneedtobebroadlyacceptedandestablishedasaconcretevisionthatcanbeembracedandacteduponbyseniorleveldecision-makersfromacrosstheindustry.ThisreportpresentsanagendaforstrengtheningtheBCconstructionindustrybyenablinginnovation.Implementingthisagendawilltakesignificantresourcesandrequiresanindustry-widecommitmenttocollaboratingandinvestinginnewproducts,processesandbusinessmodels.

Acknowledgements ThisprojectwasfundedbyBCHousingandtheBCConstructionAssociationwithin-kindcontributionsfromBrantwoodConsultingandtheDelphiGroup.

ThisprojecthasbenefittedfrombeingabletoleveragethemomentumcreatedbytheCanadianConstructionAssociation’slaunchofCanadianConstructionInnovations(CCInnovations),whichhasbeensetuptoadvanceinnovationatanationallevel.Theyhavedoneanexcellentjobofmakinginnovationa“hottopic”formanyconstructioncompanies,largeandsmall.WewouldliketoextendourthankstotheCCInnovationsteamandtoAnibalValente,chairoftheCCA,fortheirparticipationandsupportforthisproject.WehopethatourfindingswillbeusefulastheyworktobuildacultureofinnovationacrossCanada.

Wewouldliketothankeveryonewhoparticipatedinthesurvey,focusgroupsandinterviewsaswellasBCCAstafffortheirassistanceandsupport.Wewouldalsoliketothankover30projectsupporterswhowrotelettersofendorsementtohelpussecurefunding.Finally,theprojectteamcomprisesHelenGoodland(projectlead,BrantwoodConsulting)withresearchsupportfromChrisLindberg(LindbergConsulting)andPaulShorthouse(TheDelphiGroup).TheBCCAConstructionInnovationCommitteeprovidedoversightandguidance.